The Minerals-Economics unit of the South African Department of Minerals and Energy (DME) is considering the establishment of a precious metals exchange, reports Mining Weekly.

The idea is proposed in the latest MB Bulletin, which is published by the DME's own Directorate of Minerals Economics.

Ashok Damarupurshad, the author of the bulletin, notes that, although mineral commodity exchanges have been set up across the globe, South Africa has only a diamond exchange.

Important minerals such as platinum, the largest reserves of which are found in the country, have no such trading environment within South Africa.

The provision of a physical exchange for precious metals, based on models such as London's LME, the Comex in New York and Tocom in Tpkyo, would, Mr Damarupurshad believes, 'offer a crucial first step towards market opening and nurturing.'

'In combination with a futures market trading in precious metals-backed financial instruments, the Precious Metals Exchange could attract players throughout the value chain, including the ancillary services such as finance, insurance and logistics,' he said.

'If established, the exchange could be the nucleus for developing Johannesburg into a major financial hub, which would be a natural progression.'